Correlation Between Rand Capital and 1st Federal

Can any of the company-specific risk be diversified away by investing in both Rand Capital and 1st Federal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rand Capital and 1st Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rand Capital Corp and 1st Federal Savings, you can compare the effects of market volatilities on Rand Capital and 1st Federal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rand Capital with a short position of 1st Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and 1st Federal.

Diversification Opportunities for Rand Capital and 1st Federal

0.0

Correlation Coefficient

Rand Capital  1st Federal

Pay attention - limited upside

The 3 months correlation between Rand and 1st is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and 1st Federal Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Federal Savings and Rand Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rand Capital Corp are associated (or correlated) with 1st Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Federal Savings has no effect on the direction of Rand Capital i.e., Rand Capital and 1st Federal go up and down completely randomly.

Pair Corralation between Rand Capital and 1st Federal

If you would invest  1,371  in Rand Capital Corp on September 28, 2024 and sell it today you would earn a total of  429.00  from holding Rand Capital Corp or generate 31.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Rand Capital Corp  vs.  1st Federal Savings

Rand Capital Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

1st Federal Savings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1st Federal Savings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, 1st Federal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rand Capital and 1st Federal

The main advantage of trading using opposite Rand Capital and 1st Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, 1st Federal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 1st Federal will offset losses from the drop in 1st Federal's long position.

The idea behind Rand Capital Corp and 1st Federal Savings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.